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Author Topic: The Bitcoin Trading Group  (Read 3827 times)
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September 14, 2011, 11:01:38 PM
 #1

Greetings,

The Bitcoin Trading Group is now open for business.  The BTG is a trading organization which allows individuals to follow a bitcoin trader’s transactions in the Mt. Gox market.  The Bitcoin Trading Group has been managing a few accounts for a testing period and is now ready to open to the general public.

The BTG is not a hedge-fund or investment service, but rather it is an opportunity for individuals to mimic a bitcoin trader’s trades for a performance fee (10%) based on a high watermark.   The objective of the BTG is to maximize the bitcoin in a follower’s account and assess a performance fee based on the bitcoin generated.  We value your privacy, so we do not require anything but API details through email.

How it works:
1.   Open an account with Mt. Gox and fund it with bitcoin
2.   Create an API key to both get_info and trade and email this key to us
3.   We will trade your account and assess a performance fee based on profits generated

What we do:
1.   We will enter trades in a master account which will be mimicked in all participating accounts
2.   We will trade in the hopes of growing the bitcoin balance of individual participants
3.   We will invoice clients through the email which they provide requesting a 10% performance fee on all gains from trading activities.  We will operate on an investment cycle – typically a week to a month (depending on market conditions).  During the investment cycle we will, for the most part, not add new accounts to be traded.  At the end of the cycle we will send invoices to clients
4.   If an individual will not pay performance fees, we will remove him from the program
5.   We will post our performance metrics from time-to-time

How to create an API key and give access:
1.   Create a new account with Mt. Gox and fund it with as many bitcoin as you wish to participate in the program.
2.   Within your Mt. Gox account, click on your username in the top right
3.   Click on “Application and API access”
4.   Scroll to the bottom and in the “Advanced API Key Creation” header, type a name of your choosing, and click “create key”
5.   Select “Get_Info” and “Trade”
6.   Send the “Key” and the “Secret” to BitcoinTradingGroup@gmail.com

Market and Operational Risks:
1.   We make no guarantee of profit, loss, or even activity.  We trade when a market opportunity arises both on a systematic and discretionary basis.  This means that we may have a buy or sell signal generated daily, weekly, or even monthly.  This said, any funds that an individual wishes to follow our trading methodology with must be speculative by nature.
2.   We trust the general public to pay the performance fee.  The burden of honesty is in the hands of the public.  If a large percentage of the public proves to be dishonest or reselling our trading signals, we will discontinue the program and trade private accounts.
3.   We trust the security of Mt. Gox.  If Mt. Gox is compromised, your accounts may be as well.
4.   We are not a hedge-fund or investment service.  We are an organization which allows individuals to follow a bitcoin trader by paying a percentage of profits generated.  We make no claim of being an investment advisor or a fund manager.  Any profit/loss that you experience through this program is your responsibility and you can hold us liable for nothing.
5.   By participating you agree to the above terms.

B.A. Finance
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DonnyCMU
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September 14, 2011, 11:46:13 PM
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Interesting. I have a few questions:
- Would you mind to show your past performance in Bitcoin trading?
- Can you explain how the 'mimick' part works?
- How much control would one have with the Mt.Gox API key? They would be able to execute trades, but couldn't possibly make withdrawal/deposit, right?

Thanks

Edit: yeah forget to ask about this 'high-watermark' point.
requesting a 10% performance fee on all gains from trading activities.  We will operate on an investment cycle – typically a week to a month.

So do you charge 10% of profit gained at the end of the investment cycle? Or charge 10% of the profit at the moment where the account's value is highest in the investment cycle?
For example, if the account did well and gained 20% early in the month, but didn't do so well afterward and ends the cycle with 10% loss, would you still charge fees from the unrealized gain at the peak, or won't charge anything because the account actually loss value at the end.
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September 15, 2011, 12:01:51 AM
 #3

Interesting. I have a few questions:
- Would you mind to show your past performance in Bitcoin trading?
- Can you explain how the 'mimick' part works?
- How much control would one have with the Mt.Gox API key? They would be able to execute trades, but couldn't possibly make withdrawal/deposit, right?

Thanks

1.  Past performance - 9.85% return this month in my personal account.  In my other trading activities I made 2.5% in July and 2.6% in August.  As a trader my first priority is to manage risk, so I only enter trades with the exit already located and sufficient liquidity in the market.

2.  The mimic part is run through a program created by a prominent developer in the bitcoin community.  Basically the software gets an account balance of all the individuals who are participating in the program and lets me know how much bitcoin or USD I'm trading.  When I enter a trade, it divides the quantity I am trading out to all the accounts which are participating based on a percentage ownership. 

Example - I have 3 customers.  Two customers have 10 bitcoin, and one has 100 bitcoin for a total of 120 bitcoin under management.  I enter a trade to sell 60 bitcoin.  The first two customers with 10 bitcoin each have an 8.33% stake while the large customer has an 83.33% stake.  My order is divided proportionately so the two customers each sell 5 bitcoin while the larger customer sells 50 bitcoin.  The percent gain or loss I make on this trade will be mimicked across every account.

3.  The control you give me is that I can read the information about your account and I can trade your account.  You are allowed to deposit and withdraw exclusively from your account.  The only change in BTC in your account should be from you or from trading.  This is YOUR account, not mine.  I will just request a fee for any profit I generate on a high watermark which you will voluntarily send me.

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September 15, 2011, 12:05:27 AM
 #4

I will just request a fee for any profit I generate on a high watermark which you will voluntarily send me.

What is the 'high watermark'?

PGP KEY | 1Bitcoin3Tg2KWyAq3wzivdqwYqGwKYaGd
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September 15, 2011, 12:11:08 AM
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Sometimes, I feel more lazy than I feel paranoid. Would it be possible to give you api access to withdraw/deposit, so that I would not have to pay invoice manually?
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September 15, 2011, 12:24:04 AM
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Sometimes, I feel more lazy than I feel paranoid. Would it be possible to give you api access to withdraw/deposit, so that I would not have to pay invoice manually?
Why don't you give me your API access to withdrawal, and I'll manually pay the invoice on your behalf  Grin Grin Grin
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September 15, 2011, 12:24:19 AM
 #7

I will just request a fee for any profit I generate on a high watermark which you will voluntarily send me.

What is the 'high watermark'?

A high watermark is basically a term which says, "I have to make money for you before I get paid".  It's a point equal to the highest value your account has been under my management.

Example - You start out with 10,000 bitcoin.  I trade your account up to 11,000 bitcoin and I take a 100 bitcoin performance fee, so your balance is 10,900.  The high water mark is 11,000.  I will not receive any bitcoin from you until I push your account above 11,000 bitcoin.

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September 15, 2011, 12:25:15 AM
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Sometimes, I feel more lazy than I feel paranoid. Would it be possible to give you api access to withdraw/deposit, so that I would not have to pay invoice manually?

No.  This is an operational risk I don't want to be exposed to.  Later down the road, possibly but until I can manage the risk of it, this is a trade I don't want to take Smiley

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September 15, 2011, 12:29:32 AM
 #9

Interesting. I have a few questions:
- Would you mind to show your past performance in Bitcoin trading?
- Can you explain how the 'mimick' part works?
- How much control would one have with the Mt.Gox API key? They would be able to execute trades, but couldn't possibly make withdrawal/deposit, right?

Thanks

Edit: yeah forget to ask about this 'high-watermark' point.
requesting a 10% performance fee on all gains from trading activities.  We will operate on an investment cycle – typically a week to a month.

So do you charge 10% of profit gained at the end of the investment cycle? Or charge 10% of the profit at the moment where the account's value is highest in the investment cycle?
For example, if the account did well and gained 20% early in the month, but didn't do so well afterward and ends the cycle with 10% loss, would you still charge fees from the unrealized gain at the peak, or won't charge anything because the account actually loss value at the end.

Reply to edit:

At the end of the investment cycle, I charge a 10% fee of (final balance - initial balance) if it is greater than 0.  Your high watermark is set at the highest level I put your account.  So let's say we go from 1,000 bitcoin to 2,000 bitcoin and back down to 1,100 bitcoin - my performance fee is 10 (10% of 100 profit) bitcoin and your high watermark is 2,000 bitcoin.  I will not make another bitcoin from your account until I push you above 2,000 bitcoin.

B.A. Finance
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September 15, 2011, 03:51:54 AM
 #10

Given there might be losses, how does one manages the maximum loss alowed for you to have?

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September 15, 2011, 04:06:34 AM
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Given there might be losses, how does one manages the maximum loss alowed for you to have?

The maximum loss really is determined by you since it is your account in the first place.  If the drawdown exceeds a comfort level, feel free to close the account and move your bitcoin back to your main account.  This said, all BTC in management should be speculative by nature.

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September 15, 2011, 04:31:36 AM
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Given there might be losses, how does one manages the maximum loss alowed for you to have?

The maximum loss really is determined by you since it is your account in the first place.  If the drawdown exceeds a comfort level, feel free to close the account and move your bitcoin back to your main account.  This said, all BTC in management should be speculative by nature.

Or I could simply revoke access to the API token you have on hand from within the MtGox interface.

PGP KEY | 1Bitcoin3Tg2KWyAq3wzivdqwYqGwKYaGd
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September 15, 2011, 10:22:51 AM
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1.  Past performance - 9.85% return this month in my personal account.  In my other trading activities I made 2.5% in July and 2.6% in August.  As a trader my first priority is to manage risk, so I only enter trades with the exit already located and sufficient liquidity in the market.
Is this performance in USD or in BTC?
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September 15, 2011, 12:19:12 PM
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Is initial funding of the account only in Bitcoins?
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September 15, 2011, 12:36:19 PM
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Given there might be losses, how does one manages the maximum loss alowed for you to have?

The maximum loss really is determined by you since it is your account in the first place.  If the drawdown exceeds a comfort level, feel free to close the account and move your bitcoin back to your main account.  This said, all BTC in management should be speculative by nature.

Or I could simply revoke access to the API token you have on hand from within the MtGox interface.

Yes, that is a way to close the account.  The platform I trade on will automatically reflect your withdrawn bitcoin so I will immediately trade as though that bitcoin were no longer in the balance.

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September 15, 2011, 12:38:03 PM
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1.  Past performance - 9.85% return this month in my personal account.  In my other trading activities I made 2.5% in July and 2.6% in August.  As a trader my first priority is to manage risk, so I only enter trades with the exit already located and sufficient liquidity in the market.
Is this performance in USD or in BTC?

Other trading activities is in USD.  The BTC trading is currently a 9.85% profit in USD with a floating profit of 29% in bitcoin.

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September 15, 2011, 12:39:47 PM
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Is initial funding of the account only in Bitcoins?

It does not have to be.  My personal preference is that it is in bitcoin, but a USD account is fine as well.

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September 15, 2011, 12:47:50 PM
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What happens if I add/withdraw funds or even trade while you are at the trading phase? Just asking.
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September 15, 2011, 02:11:57 PM
 #19

Is there a difference in your commission for a higher volume account?

For example, Id I gave you my api key to one of my accounts, letting you trade with 10k USD to start, will you take the same commission from me as you would an account with $500.00 ?

-Charlie

Bitcoin pioneer. An apostle of Satoshi Nakamoto. A crusader for a new, better, tech-driven society. A dreamer.

More about me: http://CharlieShrem.com
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September 15, 2011, 02:20:45 PM
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What happens if I add/withdraw funds or even trade while you are at the trading phase? Just asking.

At this stage, I will more than likely just remove that account from participation until the next cycle.  If I have a position on and the account holder disagrees with it and sells out, at the end of the cycle, there could be a debate of who actually generated any profit or loss.

B.A. Finance
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